Net Neutrality Vs. Title II – They Aren’t the Same

Since Title II passed I’ve seen a lot of articles that either indicate buyers remorse or have always been against Title II and are gloating that it’s going to be overturned. For example, Wired had an Op-Ed yesterday that used major points from Chairman Pai’s dissent against using Title II. Title II is clearly a divisive issue, as the guys over at KBMOD, where I also write, are completely divided over the supposed benefits of Title II. I sincerely hope that when we look back at this debate that we see this discussion as a confusing bit of history, because nothing happened. Where the Internet didn’t change and remained an open platform for everyone to easily and equally use.

Net Neutrality and Title II are not the same thing. Title II is an old law originally written in 1934 to regulate a single monopoly with the hopes of create more competition. It wasn’t successful but the legacy of Title II played an important role in the creation and development of the Internet. Title II was the policy regime that APRANET was developed. Whenever a scientist at MIT wanted to use a graphically powerful computer in Utah Title II was in full effect on that data system. Furthermore, Title II was the law of the land for all of dial up Internet. Which was actually a very good thing. The fact that there was Local-Loop unbundling meant that you could have an Internet service that was different than your phone company. It was also likely, given how low the costs were, that these ISPs didn’t have to pay many of the taxes that the Phone company did that you used to buy access to the Internet. We already know that Title II has and can foster a culture of innovation.

Net Neutrality is different than Title II because it was the architectural approach the initial designers took for creating the internet. There were a few key reasons for this, it was easier, required less computing power, and the majority of the early pioneers believed in what became the Open Source movement. In many cases it was the exception rather than the norm, early on, for scientists to patent their computer research. It’s likely because most of these researchers were Mathematicians and Physicists that came from a military background (WWI and WWII and all), so they weren’t used to patenting due to their educational background and the requirement for secrecy contributing to the war effort.

To provide preferential treatment to one packet of data over another required tools that simply would have prevented the data from arriving at its destination in a timely fashion in the 70’s. Remember this was during the time when a personal computer didn’t exist and computing used mainframes and terminals to do the work (interestingly we’re going back to that a bit with the cloud). This means that the routers would have had to have been mainframes themselves to decode the data and figure out what type of data it was before sending it to it’s next location. This was seen as a waste of computing power as well as an invasion of privacy. The point of the Packets was to help keep the data save and secure as much as to maximize capacity on lines connecting the computers.

One of the largest complaints about implementing Title II is that there’s not enough economic evidence to support it. I believe that to be true to some extent. It’s hard to forecast something that’s happening as it’s happening. Especially since the FCC was unlikely to get access, legally, to the Netflix-Comcast/Verizon deals to ensure equal access (or maybe preferred) to their lines. It was clearly shown by Netflix that Comcast/Verizon were intentionally causing issues they could easily resolve and they did immediately after they got paid. With Comcast/Verizon planning to foreclose the video streaming market in this fashion and violating the spirit of Net Neutrality, some sort of regulation was needed to prevent this foreclosure.

I would have rather not had any sort of regulation go into effect. However, I believe that the actions that Comcast and Verizon are taking are anticompetitive and anti-consumer. Time Warner Cable supposedly makes 97% profit on their broadband service, which isn’t a surprise whenever you have a local monopoly/duopoly for broadband.

Could there have been a better way? Yes, the FCC could have taken action that would have forced increased competition. Something like setting goals for every city in the US to have no fewer than 3 broadband providers and providing assistance to municipalities that wanted to develop their own to meet that goal. Ironically, the one provision not included in the Title II rule that would help with that is local-loop unbundling, which would reduce the cost of a new ISP entering the market as they wouldn’t have to build their own network, which has slowed Google Fiber down considerably.

Should we celebrate about Google joining net neutrality fight?

It’s time we be skeptical of high tech companies that support policies that we want. Today, a large number of tech companies came out against the FCC’s plan to allow internet fast lanes. They aren’t as bold as Mozilla in their claims, they don’t push for the most extreme best for the consumer perspective. We, as consumers, have to understand there’s a reason for this. These companies (and there are a lot) wrote the letter without stating what their position actually is, just that they are for a “free and open internet.” This is essentially a dream statement for a lawyer/lobbyist, because “free” and “open” can mean a variety of things based on that company’s perspective.

These companies are willing to push for a free/open internet insofar as it enables them to make money. We have to understand that. Many of these companies are looking to disrupt incumbent market players and are leveraging the internet to enable them to do that.

Normally, I’d be really excited about all these companies coming out in favor of net neutrality. However, because of their tepid support, their lack of recommendations of what to do to address the net neutrality issue, and tardiness to the conversation I’m concerned as to what their actual motives are for this debate. This is a very different discussion than SOPA, where just coming out against the bill was enough. In this case it’s not, we need them to provide clear direction on what the FCC SHOULD do instead. This provides the FCC a path forward and a way to drive the conversation. Without that, essentially there’s no clearly articulated alternative during THIS debate. Yes, they’ve made an argument before, but they aren’t this time.

I also am concerned by this turn of events because of the recent report that Google and the NSA had a very close relationship. In very strict version of net neutrality deep packet inspection wasn’t possible because there was no way to actually do it. The first step to packet discrimination is knowing what’s in the material. Truly end-to-end net neutrality precludes the ability to eavesdrop and snoop on content being passed along the IP backbone. Any sort of relationship between the NSA and arguably the largest internet company in the world necessarily limits the full extent that Net Neutrality can actually be implemented.

Furthermore, we also must remember that a large number of these companies that are now for Net Neutrality were also for CISPA which includes handing over data to the government. Which, based on Google’s relationship with the NSA, they essentially did anyway.

So, it’s a good thing that these companies came out for Net Neutrality because truly only the power of their lobbying can overcome the FCC’s proposal and push Comcast and Verizon into accept the new rules. I don’t think that we citizens could do it on our own.

(if you want to try to fight corruption that’s sort of on display here, check out Mayone.us)

Culture wars: the battle we didn’t know we’re losing for access to our culture

Our culture is being held hostage

Humans are a collection of story tellers. When we hang out with our friends, new and old, we spend a great deal of time telling stories. These stories define who we are. In cases where we first meet we try to find common ground through current events, current cultural experiences, like the Olympics – TV shows, books, and movies. When you know nothing about another person, these are the only basis you have for building an understanding of what they stand for and who they are. To be honest, in many ways they are terrible indicators of what type of person they are, but they can help you identify if that person is someone with a similar world view to your own. Once you move past those conversations you move on to personal stories. The things that made you laugh and, conscious or not , enter into a game of one upmanship. Now most of the time you’re just trying to find a similar experience to relate to theirs, but it can be misconstrued.

In many cases the only context you’ll ever have with the person is through a shared experience, access to our communal culture. Regardless of our awareness or how willing to admit it we are, we have cultural gate keepers. To access any of our current culture we have to pay to access it. That’s fine, the people that produced it should definitely get paid for the work that they did. However, the people we’re paying are necessarily the people that produced the work. We’re paying for internet access at least twice (if you have home internet and a mobile data plan). In some cases that means you’re paying the same company twice for access to the same thing (verizon wireless and verizon FiOS).

Additionally, these companies have no incentive to provide better access to the content that you want o see. It’s actually in their best interest to make it more difficult and have worse service, so that the services that you want to access will pay them again for you to access the service that you are paying to access. Furthermore, these same companies think that if you use the internet a lot you should pay a higher rate!

This isn’t really anything new. I’ve been saying this for a few years. But what drives this is rent seeking behavior, investors that don’t really know what’s going on, and arrogance.

Shrinking Public Domain

The public domain is the area of our culture that no one owns any more. It’s been published for so long that it’s free to be consumed by everyone. Disney hates this. The main reason is that Mickey Mouse should be in the public domain, or would be based on the laws at the time of his creation. However, Disney is not above using the public domain to make a lot of money. Here’s a list of movies they’ve created based on public domain (over 50). FIFTY movies based on the public domain – it’s great for a corporation to exploit the public domain, but if you try to do something you’re going to get sued.

I’ve written about Lawrence Lessig a lot, he’s a bit of a hero of mine. He’s got a lot of integrity and really pushes for what he believes. He recently was sued (he’s a copyright lawyer) and forced a settlement with the company. He’s one of the few people that can do this, he has the knowledge, the money, and the desire to do this. In many other cases, it’s up to pro bono lawyers to fight these cases because the person in the wrong cannot fight. It’s literally David vs. Goliath. However, if David is provided the right resources most of the time Goliath goes down.

This is the case we’re dealing with in the propose Comcast Time Warner merger. Where the people most impacted have little voices. Companies are pushing to turn more of our activities into opportunities to make money. Gamers that stream on Twitch are going to be pushed to pay more, Twitch is going to be pushed to pay more for high quality access for uploads and downloads, and the people watching those streams are going to be forced to pay for quality streams. This is our culture. We are people that don’t want to be controlled by cable companies. We don’t want to be forced to deal with this. Our needs are not being met by the market.

Because we’re disparate, companies and incumbents are winning the culture war. Most people aren’t aware that we’re in a battle over affordable access to our culture. Memes, TV shows, Movies, and whatever retarded shit we watch on the internet is our culture. Making it inaccessible is a battle our gate keepers are winning. We need to figure out how to fight back. I plan on switching from Comcast when I move and never going back. I plan on switching to T-mobile and never going back to Verizon. It’s time to put our money where our mouth is. It’s going to be painful, but without our support those companies can’t oust the incumbents and cannot force change.

We need to force change with our wallets.

What’s the difference between Ma Bell and Comcast?

If you were born in the 80’s or before you know that Ma Bell was the only phone company in town. Born any later than that you were born into a world without a single monopoly for telecommunication. That’s right, we’ve had a point in our collective history where there was only a single phone company. There are rules in place that prevent something similar from happening with Comcast, but we’ve been there before. However, I believe there are critical differences. AT&T knew they were a monopoly and they were a state sanctioned monopoly. They did everything in their power to keep prices down to prevent being broken up. AT&T actually had a broader monopoly than what Comcast could ever hope to have. They made the phones that worked on the line, they made all the telecom technology that made it work, and they designed the services that made it work. This is something called a natural monopoly, which I’ve written about before. A former founder of Comcast has declared Comcast a natural monopoly.

The biggest difference between Comcast and AT&T, back in the day, was that they did everything they could to keep the government happy. Was it perfect, no clearly not, there were shady business practices, but we as a society benefited greatly from Bell Labs. To this stay is still one of the greatest research facilities that ever existed. If it wasn’t for Bell Labs our current way of life would be very different. I highly suggest checking out the book on it.

Comcast claims to be pushing innovation with their X1 Xfinity platform, but that’s not really true, it’s simply a new operating system pushing content. Voice activation isn’t innovation and if that’s your main selling point then you’re in serious trouble. As I mentioned yesterday, the Netflix deal is a major concern, the Verge is saying the Internet is fucked and that we need to be contacting the FCC daily to un-fuck it.

I’m not entirely sure that the FCC can fix it. Congress has greatly hamstrung the FCC in dealing with internet companies, furthermore, their solution of calling the internet a Utility won’t work. If you aren’t aware we’ve had big pushes to deregulate the utility industry which unfortunately hasn’t really made rates better in many cases or in the long run. I think that it’s fair to say that in the telecom industry this is true as well. The impact of the AT&T break up has been this long term collection of conglomerates that continually increase price as well as “Fees” which similar to baggage fees are hidden from the “price” of the service. So, treating the internet like a utility isn’t going to work. What we need to do is treat it like a road.

Everyone that uses a car on the road is taxed based on use (Gasoline taxes) everyone pays for a portion of the maintenance based on other local taxes too. No, these aren’t perfect and are going to be under pressure based on hybrid and electric cars – and new models are being proposed. Of course one way to do this is through toll roads (which really never work) or through some sort of black box in the car to measure mileage (which no one wants).

Essentially it’s a pay for bandwidth consumed, so if you’re a high consumer of bandwidth you’d pay more, but the rates need to be realistic and the goal would be to cover expenses and continually improve service while making it cheaper. Which brings me back to AT&T – the president of Bell Labs had one mantra anything could be tested but only if it could lead to a “Better, cheaper or both” network. A public internet similar to a road that was paid to continually get cheaper, better, more secure, and faster is the only way to truly un-fuck the internet. It’s not likely to happen because it’s not a capitalist response. However, the internet these days is similar to public transpiration – it’s goal isn’t to make money, it’s goal is to enable economic activity. If think of it that way, then we can see the long term benefit of the whole economy rather than singular actors.

Data, Monopolies, and the Comcast/Netflix Deal

So, apparently, there are these groups that sell bandwidth for data transit to companies like Netflix. These companies interface with the major ISPs like Verizon and Comcast and connect the broader backbone of the internet to specific ISPs. These interfaces, like any interface can become over burdened – similarly to a congested intersection on the road. The problem is that with data information can be lost or transmitted extremely late, the lost data is called a “dropped packet.” These packets are like little packages of data that will likely provide some desired bit of image, article, or video.

These companies have typically provided “peer connections” that are free to transmit data because, well you’re paying to access the data and Netflix is paying to allow you to send the data. Win-win for both user, ISP, transit company (Cogent), and Netflix. Pretty good system right? Well it was until Verizon and other ISPs went and decided that they wanted to charge Cogent to for access to their networks so their users can access the data that Cogent is transmitting for Netflix.

Why can the ISPs do this? They are acting like monopolies in many ways. These companies are essentially islands of monopolies that do not compete with each other. With little incentive from the market to change behavior they are able to seek additional monies from their customers and providers without much risk of member defection. Furthermore, as Verizon is continually posting higher and higher Average Revenue Per User (ARPU), they are making more from the same number of people. When you have no where to go, that means raters are going up, and if they aren’t investing that additional money, that means profits are going up.

What does this all mean? It means that Netflix is getting the squeeze in a way that they weren’t expecting and with the proposed merger between Time Warner and Comcast things are only getting worse. The ISPs are able to say that they aren’t negatively hurting Netflix alone, because everyone that uses Cogent is getting hit the same way. It’s intentional according to the Cogent CEO. To get around the Cogent bottleneck, Netflix has decided to have a direct connection between Comcast and Netflix. This means that Netflix services will have less of a bottleneck to compete with other bits of data. This is a big deal for Netflix as lost data packets likely mean blocky video or video that is unwatchable.

Netflix decided to push for their members by paying for higher speed access directly to Comcast. This is great, but on the other hand terrible. It’s terrible because one of the greatest champions of Net Neutrality has bowed out of the fight giving in and paying to provide higher speed video quality to their members. It’s good because they are doing what’s right for their members, even though Comcast is at fault here by making cynical business choices to negatively impact the quality of the services provided over their pipes.

This could have interesting implications if a company decides to use this clear agreement as an obvious breach in the NBC/Comcast Net Neutral agreement. This could, if pushed correctly, have serious far reach implications for the company. However, I’m not sure who would push for this law suit. Hulu won’t, as it’s partially owned by Comcast, maybe Google will as they are looking to compete head on with Comcast as an ISP, video content provider, and in other realms. Another potential is Aereo that has already won a few major victories over NBC/CBS in copyright (The company streams over the air HDTV as a DVR service). So if they don’t have equal access as Comcast or Netflix, they could certainly sue over this – as it would hurt their business growth possibilities.

Update: Apparently Netflix is in negotiations with both AT&T and Verizon as well. Furthermore, Verizon believes that these agreements are clear that we don’t need more “regulation”in the form of net neutrality. Clearly, if a monopoly can extract as much money from both their members and the content that brings value to their networks, there’s no need for regulation!

I think that these practices are going to seriously impact the ability of smaller firms to compete. I also would fully expect a company like Twitch to start feeling the pressure next.

Is Net Neutrality regulation commie nonsense?

Network Economy

Regulation’s a bad thing, right? Personally, I think there are instances where regulation is an amazingly good thing that drives innovation. We also need to be cautious about who is saying regulation is good or bad. Back in the 90’s we’d hear that regulating in anyway to prevent acid rain would cripple business and kill our economy. This clearly didn’t happen, we have acid free rain for the most part, we have more productive manufacturing than ever. We also hear that regulating CEO pay by median rather than average is significantly more complicated to the point that a place stacked full of MBA’s can’t figure it out. Then there are regulations that pick winners like Solyndra and turns out to be a disaster. These cause higher taxes and are actual drains on the economy (personally I’m on the fence about experimenting with new technologies and having the government support them, but that’s me).

What about the FCC “regulating” net neutrality? I think that it’s important to look at how this all started. First, I’ll start with a bit of a history with the telecoms, then move to how the internet was developed, and move to comparisons between other monopolies.

AT&T has been described as a natural monopoly. This was partially helped by the US government because the government wanted coast to coast telephony and selected AT&T as the standard for that activity. This gave AT&T incredible market strength, but was also extremely fragile as it was continually under threat of being broken up for being a monopoly (which is was). To do everything they could to avoid this, the geniuses at Bell Labs continually designed ways to keep their costs down, improve quality, and make very thing better. They also had some government deals that helped them a lot (military contracts for telecom stuff, like the first satellite). The value of AT&T’s network grew every time a person joined the network.

The fact that one person joined Network A over Network B could further impact the growth of that network. Let’s say Person A is friends with 5 people and is already on Network A, it’s likely, if they are really good friends and A is known for making good decisions, that those five people will join A on Network A. The value increases by more than simply 5, because all five of those people can talk to each other as well as every other person they know on Network A. Now if Person A has more friends, but not as good of friends and they actually are better friends with Person A’s friends they will also likely join Network A. This sort of cascade effect will continue to happen. This is also known as Metcalfe’s law.

When AT&T was force to break up, all of that interoperability remained. Instead of one big monopoly there were regional ones instead. As we’ve seen over time, these same regional operators have slowly re-joined back into 2 Bells versus the non-Bells. AT&T being split is a type of regulation for sure, but it did spur some interesting competition for a time.

How the Internet was designed:

The internet was originally designed to operate in many different application layers. Essentially the bottom of the stack was Internet Protocol which was agnostic to the type of information being sent across it. At the time, the most efficient method was over Ethernet so there was not any requirement to be concerned over the application medium. Over time there would be some concern, but that was really addressed by the protocol.

What would happen is that the applications that required information to be sent on either end would translate the information to be used by the layer below it to send out, such as a web browser to the OS, to the network driver to IP, across the internet to the network driver to the OS to the web server application. Across this entire process the actual data being sent was unknown to any of the nodes in between the application layers. (If you’re interested in this check out Internet Architecture and Innovation).

Of course the companies providing the bandwidth for that did not want to find itself in a similar role as they had after the break up of AT&T where they were forced to become “dumb pipes” for whatever people wanted to send across their network. To prevent this they created capabilities like deep package inspection and other tools to identify what content was being shipped across their lines. This also was the beginning of violating “True” net neutrality.

Why were they dumb pipes? Because they were defined as a common carrier to increase competition across the land line providers and ISPs the telephone companies had no choice. This lead to the explosion of ISPs like AOL, Century Link, and so on. What has happened since? The broadband lines have been ruled that they are not “Common Carriers“. Meaning that the data across the line can be treated however the companies that own the lines want.

Why is this bad in a network economy?

In a network economy, being able to fully control anything and everything can be very bad for the consumer if there is no other option. Now, you could argue that there are options, but in most cases because of other monopoly rules there are few options for allowing a new ISP.

A perfect example where a network monopoly isn’t a big deal is in Smart Phones. The iOS App Store is a natural monopoly in a network. The more people using the iPhone the more valuable it became and more app developers developed apps. It never became a problem that Apple regulates the entire experience BECAUSE there were other networks you could shift to, such as Blackberry, webOS, Windows (whatever mobile version you want to include), and, of course, Android. All of these ecosystems offer very different options for devs. Additionally, within Android there are competing App stores which further benefits the consumer. If there were no other competitors to iOS and it’s App Store the constraints that Apple puts on their product would likely be viewed as very anti-competitive and a type of “foreclosure.”

Market foreclosure is using one monopoly to enable another monopoly. Now, regardless of if you think that this should have happened or not, it did. Microsoft was hit for using it’s Window’s OS to foreclose on the internet browser market and was looking to do the same with their music player. What resulted was that MS was required to offer other browsers when a new Windows OS was launched and helped to reduce the market share of IE.

How does this apply here? Comcast is already trying to do the same with Netflix in the streaming video business. Comcast owns the content (Universal, NBC, etc), the connection (Comcast Cable ISP), the rules (data caps), and if they want to charge to access their network or not. Eliminating the rules of net neutrality tilt the table in the direction of Comcast to a degree that Netflix may never recover. If Netflix, at one point 2/3 of all internet traffic, had to pay for every bit they streamed to allow for an enjoyable streaming experience they would be bankrupt in very short order.

I get that Comcast’s of the world don’t want to be dumb pipes, they own the content and that’s king. However, not every ISP owns content (Verizon/AT&T) so they aren’t at such an advantage to companies like Netflix. However that’s where AT&T’s data plan comes in. Which would essentially level the table compared to Comcast. We, as end users, wouldn’t see any benefit out of this. It’s not that our subscription fees would lower or we’ll magically get faster internet. This is simply rent seeking behavior and bad for the economy overall. Only true new competition can lead to that. Changing these rules have zero impact on that competition.

What it does do though is negatively impact the creation of new businesses that want to stream video or provide a novel product that requires high bandwidth and equal rights to streaming. Removing the protections on net neutrality dramatically increases the cost of streaming that otherwise could go into building that startup’s infrastructure. Think of the problems at Twitch.TV with their growth. My subscription fees pay for the growth of the network that I subscribe to regardless if it’s something like Twitch or Comcast. Anything else will go to shareholders and CEOs.

Could we develop other options like a Mesh network? It’s possible, but for that to work the option would have to be a public/private venture. Most citizens aren’t going to help create that and likely don’t have the technology savvy to do so. To further complicate this issue many ISPs are actually pushing to make it illegal for cities to create their own ISP.

In many cases regulation is bad for business. However, in cases like net neutrality it’s returning the net to it’s roots and enabling much stronger competition based on the merits of the company providing the service, not the arbitrary whim of network owner.

Data caps can we get rid of them?

Changes are afoot in the mobile industry. We’ve been seeing a sea change with how T-mobile looks at their customers. They’ve been changing the contracts and potentially even eliminating them. They’ve separated the phone payment plan from the monthly access fees which is an imortant first step in completely separating the purchase of a phone from the carrier that provides the services. This will eventually reduce the amount of junk files installed because  the carriers can’t force the providers to install them. I think that the reason why the Nexus 7 isn’t on Verizon Wireless is that they are refusing to install the bloatware that the Verizon is trying to force upon Google. I think this is a good thing. Google has also filed a suit against VZW to force them to allow the Nexus 7 on their network. This is going to break the carriers power over the user. Carriers don’t want to be dump pipes for the internet. The wired and cable companies are actively fighting against this by puttng data caps on downloading content. At the same time they’ve experimented with this, the wireless providers have been much harsher. However, these caps weren’t a problem in the past. According to BGR a website that focuses on mobile issues has noted that the amount of data that wireless users has begun to regularly break the data caps. T-mobile has also offered all of their plans without datacaps. This will likely push many data users on verizon and AT&T to switch over to these networks. This will likely put more pressure on the carriers than they have experienced in over a decade. I look forward to this increase in competition especially since I refuse to go over my data caps and greatly limit the amount of data that I use over the wireless networks. I believe we’ll see some interesting changes in the future.

I think that these changes will also preclude the merger of T-mobile and sprint as the US market needs additional competition not less. I think that there will be changes in all of the companies marketing and product offerings, but likely T-mobile will be the largest winner with Sprint in second.